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Loss of Earnings Capacity & Future Prospects to be Considered While Ascertaining Compensation in Motor Vehicle Accidents : SC
A civil appeal was raised before the S.C. questioning the decision made by H.C. The appellant who was injured in a motor vehicle accident, seeked enhancement of the compensation awarded by the H.C.
Facts :
The appellant was travelling in a bus on 18-05-2012 to Hapur. When the bus arrived at Sadikpur's village at 1:30 pm, the driver of the offending vehicle trying to overtake the bus, zipped & scratched the appellant's bus. This act caused a dent in the bus where the appellant was siitting, whereby he suffered injuries. He was shifted from Dr. Khan's Rehan Hospital to AIIMS Trauma Centre.
He demanded a compensation from the owner, driver of the vehicle & the insurer. The disability report was issued by Pt. Madan Mohan Malviya Hospital showed he had suffered 89% of disability in relation to his right upper limb. A F.I.R was registered at Hafizpur P.S u/s 279 & 338 of I.P.C regarding the accident.
The appellant was unmarried during the incident & worked as a data entry typist. H used to earn Rs.12,000/- per month before that. He claimed a sum of Rs.50,00,000/- with interest @ 12% p.a by applying for grant of compensation u/s 166 & 140 of Motor Vehicles Act, 1988 against all the respondents.
All the objections raised by the respondent-insurer was rejected by the Motor Vehicles Claims Tribunal. It was observed that the appellant sustained serious injuries due to rash & negligent driving of the respondent.
The tribunal while assessing the compensation to be paid & loss of earning capacity, took the appellant's income to be Rs.8,000/- not Rs.12,000/- & 50% "towards future prospects" were also added. A multiplier of 18 was applied as he was 20 years old at the time of accident & his physical disability was taken to be 45%.
The H.C on appeal, revised & reassessed the compensation. An addition of 9% p.a was imposed. However, the court reduced the amount awarded for future prospects relying on the judgements in National Insurance Company Ltd v Pranay Sethi & ors (2017) 16 SCC 860 & Jagdish v Mohan & ors (2018) 4 SCC 571.
Appellant's Submission :
The learned counsel appearing for the appellant submitted,
- That in the case of Pranay Sethi followed by Jagdish's the court ruled that the self employed individuals should also be given benefit of future prospects apart from ones who have permanent job.
- That if the person is self employed & is below the age of 40 at the time of accident, an addition of 40% of the established income be made.
- That the H.C erred in misreading & considered only in cases of death, addition of 'future prospects to the income' can be made & not in injury.
- That the H.C should not have reduced the 'loss of future earning capacity' from Rs.11,66,400/- to Rs.7,77,600/-
- That the Court below have wrongly assessed the monthly income of the appellant to be Rs.8,000/- not Rs.12,000/-, they ignored the fact that persons earning Rs.12,000/- per month during 2012 did not have to file income tax returns.
- That the Court made an error in ascertaining the physical disability to be 45% although it was 100%.
Respondent's Submission :
The learned counsel appearing for the respondent - Insurer, submitted,
- That the Court did not made any error in assessing the compensation.
- That the loss of earning capacity cannot be 90% or more, only because one arm had become permanently disabled & it was correctly fixed at 45%.
- That there is no proof of payment of income tax to proof that the appellant earned Rs.12,000/- per month.
- That the judgement has been made in conformity with law & turning down the alleged future earning capacity.
Observation of the Court :
The court stated that while assessing the motor vehicles compensation claims, the victim is to be placed near to a position in which he was before the incident & directing compensation for lost amenities & other payments.
The court pointed out that the H.C went wrong in not considering the judgement in Jagdish's case binding & relying on the judgement in Anant v Pratap & Anr (2018) 9 SCC 450 by not compensating for future prospects. The court also stated,
"Such a narrow reading of Pranay Sethi's is illogical because it denies altogether the possibility of the living victim progressing further on life in accident cases & admits such possibility of further prospects in case of the victim's death".
The court went further & referred to Jagdish's, "The measure of compensation must reflect a genuine attempt of the law to restore the dignity of the being."
The court held that the appellant is entitled to future prospects. The court even referred to the case of K.Suresh v New India Assurance Co Ltd (2012) 12 SCC 274. The court in this case held that computing compensation requires guess work & not any mathematical exactitude or any precise formula.
The court observed that the H.C had completely ignored the realities & worked mechanically in ascertaining the permanent disability. A loss of one leg for a person who drives will lead to extinguishment of his income severely. Similarly, for a carpenter/hairdresser loss of one arm would lead to extinction of the income generation. These factors must be kept in mind while determining the extent of permanent disability.
The court referred to lot of cases to explain the extent of permanent disability. It stated that the Courts have to take into account the reality in assessing compensation & not adopt any stereotypical approach. The principle applied by H.C in halving the extent of permanent disability was entirely wrong & is unsupportable in law.
However, the court stated that the extent may not be 89% as the appellant still have one arm but it it is not 45% at all. It was assessed at 65%. The court considered the minimum income of skilled workers & ascertained the appellant's income to be Rs.10,000/- . Also, 40% for future prospects were added which made the income to be Rs.14,000/- The court calculated the income to be Rs.19,65,600/- (14,000×12×65%×18).
Judgement : The court modified the H.C impugned judgement from Rs.7,77600 to Rs.19,65,600 by enhancing it towards the future prospects & loss of earning capacity.
Judge : Hon'ble Mr Justice I. Nageshwara Rao, Mr Justice Krishna Murari & Mr Justice S. Ravindra Bhat.
Case Courtesy : Pappu Deo Yadav v Naresh Kumar & ors.
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